What is business contingency?
Business contingency is a possible future event or circumstance that cannot be predicted with certainty. Such an event or circumstances can take place either on a small scale (eg a small-scale emergency, such as employee theft) or a large scale (eg a natural disaster).
What is a business contingency plan?
A business contingency plan is a roadmap designed to help a business respond to an event that may (or may not) take place in the future. It sets out the procedures and processes a business needs in order to continue operating during such an emergency and to recover as quickly as possible.
When should a business contingency plan be used?
As a Business continuity plan is used to identify possible risks or threats, operational areas impacted and the appropriate recovery strategy and personnel, it should be used to outline a business’ plans to keep it operational in case of an emergency.
All businesses (regardless of size) should have a business continuity plan in place as this ensures that the business is prepared in case of an emergency by enabling the business to cope in a crisis and by minimising the disruption to the business and its customers.
By developing a contingency plan, a business can react faster to any unexpected events, and the faster a business is able to resume business operations, the less damage to profits and revenues it will suffer.
What about if I’m just starting a business?
Business contingency plans are relevant even if your business is only starting out or you are planning to start a new business. As unexpected circumstances can happen at any time, it is advantageous to plan in advance.
It is recommended that you include any such contingency plans in your Business plan. A business plan documents what your business is, who is going to use it (eg who will buy your product) and how you are going to make this happen.
As part of your business plan, you should include a SWOT analysis. A SWOT analysis is split into four sections (Strengths, Weaknesses, Opportunities and Threats) with each one detailing the various relevant attributes and downsides to your business and the industry. As part of the ‘Threats’ section, you should detail any potential threats to your business and the relevant contingency plans.
Having such contingency plans in place will allow your business to plan for potential outcomes that could threaten your business operations and how to respond. By planning for such events in advance, your business can demonstrate that they are prepared in case of an emergency and (hopefully) continue its business operations.